1. Field of the Invention
The invention relates to electronic dispute resolution, and particularly to electronic dispute resolution of e-commerce disputes.
2. Description of the Related Art
The Internet offers unparalleled opportunities for communication. It is means by which large amounts of information are moved at the speeds of light and electrons. It is natural that the world of commerce has seized the opportunity to conduct business through the Internet. Today, consumers order billions of dollars of merchandise, manufactures, and parts, orchestrate the transnational assembly of products, and move vast amounts of capital from one financial institution to another using electronic means including the internet.
The Internet transformed the way the industrialized world does business in a fraction of the time it took prehistoric man to determine how to put a handle on a stone hammer. This rapid change, however, took place faster then the development of the law governing Internet transactions. Today there is uncertainty as to which procedural law applies and which substantive law applies. The United States possesses a very sophisticated judicial system. Yet even the courts in the US arrive at differing, and often contradictory, decisions regarding Internet transactions. Some courts find jurisdiction if the file server of an Internet provider is located in the state (see Bochan v. La Fontaine, 68 F. Supp. 2d 692, C.C. No. 98-1749-A (E. D. Va. May 26, 1999); Young v. New Haven Advocate, 184 F. Supp. 2d 498, No. 2:00CV00086 (W.D. Va. Aug. 10, 2001)). Other courts confronting the same question find jurisdiction fails to exist when the file server resides in the state (see Jewish Defense Organization Inv. v. Superior Court of Los Angeles, 72 Cal.App.4th 1045, No. B129319 (Cal. App. 1999); Rambam v. Luhta, Cal.App. 2 Dist., Nov. 30, 2001). Some courts will assert jurisdiction if the site can simply be accessed by any purchaser (Mieczkowski v. Masco Corp., 997 F. Supp. 7821 (E.D. Texas 1998)). Some courts will extend jurisdiction if the website is interactive, others will refuse jurisdiction even if the website is interactive (Rannoch Inc. v. Rannoch Corp., 52 F. Supp. 2d 681, No. Civ. A 99403-A (E.D. Va. 1999); Roche v. Worldwide Media, Inc., 90 F. Supp. 2d 714 (E.D. Va. Mar. 27, 2000) Some courts will adhere to a choice of law provision contained in a website, even though the purchaser contends a lack of knowledge regarding the provision, and even though enforcing it works a real hardship on the purchaser (Decker v. Circus Circus Hotel, 49 F. Supp. 2d 743, No. Civ. 97-1848 (D. N.J. May 12, 1999).
As a result sellers providing merchandise through the Internet are uncertain as to where and when they may be subjected to jurisdiction. Sellers are also uncertain which law may apply when and if they are subject to jurisdiction. Consumers are increasingly being educated to the problems of jurisdiction and choice of law, and a common suggestion being made by consumer advocates is to do business over the Internet only with organizations having a physical location in their state. Businesses doing business to business transactions confront the same problems. The result is uncertainty. Uncertainty breeds apprehension. Apprehension castes a chilling pale over the Internet preventing the opportunities for speed of light, inexpensive commerce from coming fully into existence.
One solution is to conduct business only using a brick and mortar store, or else use the phone, mail, or the internet without the desired certainty as to jurisdiction and choice of law. However, if you have ever been in a lawsuit, as opposed to private dispute resolution, you know that lawsuits often pose great uncertainty. Costly legal battles raise the following types of litigation concerns:
(1) Where Can People Be Sued? When the parties to a transaction reside in different states or countries, may suit be brought in the state or country of the buyer, of the seller, of the file server, of the Internet service provider? “Where” do cyberspace transactions actually take place anyway? Under current law, this is uncertain and large, expensive, time-consuming fights may develop. It is desired to avoid having to deal with these issues by providing dispute resolution without a physical brick and mortar building, i.e., without a physical tribunal to where the parties must travel to fight the lawsuit, eliminating this as a possible point of contention or confusion. In this sense, it is desired to have a system for resolving e-commerce disputes in the same manner as the original transaction was conducted, i.e., on-line using client computers connected together over the Internet.
(2) Which Law Applies? Is it federal or state law? If state law, which of the 50 states? Which country's law applies, if the dispute is international? Under current law, determining which law applies to a controversy is often unclear and frequently culminates in added time and expense. It is desired to have a system for e-commerce dispute resolution wherein the applicable governing law and the applicable rules of procedure have already been established and agreed upon, eliminating this as a possible point of contention or confusion.
(3) How Long Will the Lawsuit Take and How Much Will It Cost? The legal costs and bureaucratic red tape associated with the typical modern commercial lawsuit often make the prospect of a lawsuit just “not worth it.” The time, money, hassle, and aggravation of litigating, especially for smaller disputes, regularly prevent people from efficiently obtaining justice. It is desired to have a system for e-commerce dispute resolution having abbreviated rules and procedures and using the efficient exchange of information over the Internet to make the dispute, however small, nonetheless cost-effective. The desired system would provide contracting parties with assurance, which, in turn, will encourage even more frequent e-commerce transactions.
Below, we provide a summary of several services operating which relate to use of the Internet for online dispute resolution. The content published at the URLs for the web sites provided is hereby incorporated by reference.
Cybersettle (www.cybersettle.com) is an example of a company that offers mediation or settlement services based on a settlement algorithm. Cybersettle uses a settlement algorithm which essentially compares two competing offers to settle and if they are within 20% of each other finds the case is settled by requiring one party to increase it offer by 10% and the other to decrease its demand by 10%.
NAM (www.clicknsettle.com) uses a web enabled case management system. It does not use the web for submission of evidence and actual dispute resolution.
National Arbitration Forum (www.arb-forum.com) is essentially a traditional arbitration service. It resolves disputes through traditional face to face hearings.
PrivateJudge (www.privatejudge.com ) allows for online submission of documents and online chats. It lacks a comprehensive set of governing procedures and assumes the parties have already resolved all issues of forum and choice of law before bringing the dispute to it. PrivateJudge uses traditional fee for service pricing.
Mar (www.resolvemydispute.com ) allows for online submission of documents. It does not appear to allow for online chats. It lacks a comprehensive set of governing procedures and substantive law, such as the Uniform Commercial Code, and the basis of both procedural and substantive decisions are unknown to the parties when they begin the arbitration process.
iCourthouse (www.icourthouse.com ) is primarily a site used by lawyers to get feedback on cases heading to trial. It allows volunteer online jurors to make decisions. It lacks a comprehensive set of governing procedures and assumes the parties have already resolved all issues of forum and choice of law before bringing the dispute to it.
Nova Forum (www.novaforum.com ) is a service that allows submission of case documents through the internet and provides private dispute resolution rooms. It possesses a set of governing procedures, but allows the parties to alter the procedures as they see fit. This feature presents an obstacle to binding arbitration since the parties may not agree to the rules and thus abandon the process. The service lacks substantive law, such as the Uniform Commercial Code, and by this omission prevents the process from going forward until the parties agree as to what law applies. Essentially the service only is applicable to parties which are predisposed to selecting rules they want to use and the law which will apply.